US-EU Trade Agreement Update

On 27 July 2025, the European Commission announced that the United States and European Union have reached a framework agreement on tariffs.

Key points from the announcement include:

15% tariffs will apply to most goods originating from the EU imported into the US. This is an all inclusive rate and the 15% does not “Stack” with previous tariffs in the same way the 10% rate did.
0% tariffs will apply to certain strategic product categories, including aircraft and aircraft parts, critical raw materials, certain chemicals, agricultural products, and natural resources.
The existing 50% tariff on steel and aluminium will remain unchanged for now.

There are no EU retaliatory measures.

The announcement of a framework agreement does bring some certainty and avoids a damaging trade war between the US and EU. This deal “creates certainty in uncertain times” in the words of the European Commission.

The impact of the deal will differ between certain sectors. Some will cautiously welcome the deal and relative certainty it brings. However most exporters will face a level of tariffs on selling into the US that have not been seen for generations with some facing a further 5% on top of the 10% applying since April.

Relatively speaking and looking for positives, besides a 5% difference for some products coming from the UK including Northern Ireland, Ireland and the EU will be in the same or a better position than other exporters to the US.

What does it mean for the pharmaceutical sector?

Currently, no duty applies to the trade in pharmaceuticals between the EU and the US.

However, President Trump previously threatened both a 25% and 200% tariff rate on imports of pharmaceuticals into the US and initiated a Section 232 trade investigation into the pharmaceutical sector. Section 232 of the Trade Expansion Act of 1962 allows the US President to impose trade restrictions (e.g. tariffs), on imports if they are found to threaten national security.

Following the deal announcement, initial messaging from the US and the EU was that if future tariffs are introduced these would be capped at 15% for EU/Irish pharma products with potentially some generic products staying at zero. Recent comments from President Trump have, however, added some further uncertainty to the position.

What does it mean for the aviation sector?

The news is positive for the aviation sector.

The deal provides for a return to 0% US tariffs on aircraft and component parts of EU origin imported into the US which is good news for the industry.

The EU position remains as is with no duty on aircraft or on aircraft parts which have or had a certificate of airworthiness.

Note this deal only applies to product of EU origin. Aircraft and parts of non EU origin may still attract tariffs depending on arrangements with the particular jurisdiction.

What does it mean for Northern Ireland?

On 8 May the US and the UK announced a trade deal which allows for reduced tariffs on certain US origin products imported into the UK and UK origin products exported to the US.

Most products of origin in Northern Ireland imported into the US should be subject to the 10% tariffs applying to the United Kingdom and not the EU tariff rate.

This means a lower tariff cost for certain product of Northern Ireland origin shipped to the US.

What should businesses consider now?

Now that the future trading relationship between the EU and the US is relatively clearer, Irish and EU businesses should consider the impact of the deal on their trade flows and exports to the US and develop a strategic approach to mitigate potential disruptions.

Advance customs planning should be a feature of all supply chain flows in the supply design phase.

Here are some key considerations:

Understand the origin and classification of your goods and your valuation methodology

Ensure you fully understand the origin and classification of goods you sell to the US and the possible tariffs that may apply.

This should be clear for products wholly produced in Ireland but may be less clear for products imported into Ireland including from Northern Ireland or which comprise substantial parts imported from other countries.

Remember the EU/US deal only applies to product of EU origin and not to all product just because it is physically shipped from the EU to the USA. For example, it would not apply to product imported from China into Ireland and later exported to the US.

The customs methodology for valuation of your supplies is also relevant (e.g. transfer pricing methodology) with the potential to mitigate the impact of the tariffs through different approaches to valuation and supply chain structure.

Other mitigation opportunities include maximising the first sale principle and “unbundling” to avoid over-paying tariffs on deductible costs.
Assess supply chains

Evaluate your supply chains to identify dependencies on US exports. Where possible exploring alternative markets can help reduce vulnerability to tariff impacts.
Cost management

Anticipate increased costs due to tariffs and develop strategies to manage these expenses.
Explore customs procedures and other mitigation opportunities.

Depending on your supply chain and operations there may be benefit in availing of special customs procedures for goods undergoing processing in the US for eventual export, or goods that may be able to be initially stored/undergo processing in the US before possible sale e.g. foreign trade zones.
Stay informed

Keep a close watch as details of the agreement are released to ensure you fully understand and manage any potential impacts on your business.

Managing geopolitical risk

As global geopolitics continue to shift, staying ahead of the curve is essential for maintaining a competitive edge. So what do Irish business leaders need to consider?

KPMG’s Top Geopolitical Risks 2025 shows how by treating geopolitical risk as a fundamental part of business strategy, companies cannot only address threats but also seize opportunities, paving the way for growth and success.

How can KPMG help?

KPMG helps businesses manage the uncertainty created by the new US tariffs and EU countermeasures by:

Helping you obtain and analyse your trade data, to provide you with a clear picture of your supply chain and where risks and opportunities lie
Using our tariff tools modelling the impact on the business of new tariff measures
Modelling and quantifying duty costs and opportunities under various “what if” supply chain scenarios
Identifying and taking advantage of bonded warehousing, inward processing, free-trade zones and drawback to achieve savings and minimise duty costs
Reviewing classification and origin to identify opportunities to avoid or minimise increased duty costs
Reviewing valuation methodologies to reduce amounts subject to tariffs
Monitoring developments to keep you informed of the evolving landscape
Advising on transfer pricing implications associated with the impact of the tariff changes on group policies
Interpreting, drafting and negotiating supply agreements to help manage the tariff disruption Helping build supply chain resilience and cost efficiencies

Our tariffs team comprises experts across Customs, Transfer Pricing, Legal and Supply Chain who can discuss how the new trading environment can affect your business and help maximise opportunities through the disruption.

Get in touch with our team below; we look forward to hearing from you.